FAQs
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What’s the maximum SBA loan amount?
Up to $5 million for 7(a) loans.
How long does it take to close an SBA loan?
30–90 days is typical, depending on complexity.
What’s the minimum credit score for an SBA loan?
Usually, 680+ but varies by lender.
What’s the fastest possible closing?
About 30–45 days with complete documentation.
Are SBA loans only for certain industries?
Most industries qualify, with exceptions, including but not limited to speculative or investment-focused businesses.
Do SBA loans support acquisitions?
Yes, SBA 7(a) loans can finance business acquisitions.
What industries are excluded?
Nonprofits, investment companies, and certain speculative industries.
Can startups get SBA loans?
Yes, certain 7(a) loans with strong business plans.
Can I speed up the SBA loan process?
Yes, by working with a PLP lender and providing complete documentation.
Do I apply directly through the SBA?
No, you apply through SBA-approved lenders.
Does applying for an SBA loan hurt my credit?
A hard inquiry occurs, but the impact is minimal.
Do SBA loans require collateral?
Collateral is encouraged, but lack of it is not always a dealbreaker.
Are SBA loans guaranteed to be approved?
No, approval depends on meeting requirements.
Can all existing debt be refinanced with an SBA loan?
No, some types don’t qualify under SBA guidelines.
What happens at closing?
You sign documents, finalize conditions, and the loan is disbursed.
How much equity must I invest?
Generally, at least 10% for many SBA loans.
Can I use SBA loans to refinance debt?
Yes, if it improves cash flow, but you need to have a history of timely payments, and the debt cannot be a Merchant Cash Advance (MCA).
Can nonprofits apply for an SBA Loan?
No, only for-profit businesses qualify.
Can retail stores get SBA loans?
Yes, if they meet eligibility and repayment requirements.
What is underwriting?
A review of credit, financials, and risk.
Can startups with no revenue qualify for an SBA loan?
Yes, if they have strong business plans and equity investment.
Are SBA loans good for franchises?
Yes, many lenders have experience financing franchises.
Do all owners need to provide guarantees?
Yes, generally anyone with 20%+ ownership must sign.
What paperwork is required for an SBA loan?
Tax returns, financials, business plans, and SBA forms.
Are all franchises eligible for an SBA loan?
No, SBA regulations limit the franchises that are eligible. Check with an experienced SBA Lender early in the process to confirm your franchise is eligible.
Can I add a co-signer?
Yes, co-guarantors can strengthen the application.
Will paying down credit cards improve approval odds?
Yes, lower utilization improves both score and debt ratios.
Can business credit compensate for a lower personal score?
Yes, a strong business track record helps.
What is the minimum FICO SBSS for SBA 7(a)?
Usually 680 FICO, though lenders may require higher.
How long does a partner-buyout loan take to close?
Roughly 45–60 days once transactional due diligence has been completed. This includes underwriting, business valuation, and a finalized purchase agreement.
Is seller financing allowed?
The treatment of equity no longer applies under the current SOP 50 10 8 starting 6/1/25 for a 2-year standby. Full loan period standby of seller debt is now needed. For a Partner Buyout, the seller debt can be included but will not count for the 10% equity when the 10% equity is needed.
How much can I finance for a partner buyout?
Up to 100% financing is available for Partner Buyouts depending upon the business cash flow (and remaining owners have been with the business for 24 months or more, and debt to worth, prior to sale, is 9:1 or better).
Do I need an appraisal or valuation?
Most lenders require an independent valuation to support the buyout price.
Can I use a 7(a) loan to buy out multiple partners?
Yes, as long as the remaining owner keeps operating the business.
Are personal guarantees required for an SBA loan?
Yes, all 20%+ owners must personally guarantee the loan.
What documents do I need to apply for an SBA loan?
A business plan, projections, personal financials, and credit history.
Can a franchise qualify as a startup?
Yes, franchise startups are common SBA borrowers.
How much equity do I need to contribute?
Typically, 10–20 % of total project costs.
How long must a business operate to apply for an SBA loan?
Startups with zero operating history are eligible if well-prepared.
How long does approval take for an SBA Loan?
On average, 30–90 days, depending on loan type.
Can software purchases be financed?
Yes, if they are essential to operations.
Do lenders monitor KPI performance?
Yes, adherence to projections is often required.
What if growth projections miss targets?
You need reserves or fallback plans.
Can I phase fund expansion?
Yes, with structured disbursements.
Are equipment and systems eligible?
Yes, especially if used in operations.
Can I use SBA funds for hiring costs?
Yes, within working capital allocations.
Does a refinance improve credit metrics?
Potentially, if it reduces interest burden and extends term.
How do closing costs compare to benefits?
You must model breakeven of fees vs. interest savings.
Will refinancing reset my maturity?
Yes, you may get a new longer repayment term.
How long does an acquisition SBA loan take?
Typically, 60–120 days, depending on complexity.
What is a pro forma, and why is it required?
It projects combined operations and debt service post-close.
Can I finance integration costs?
Yes, up to limits in the loan package.
Is the acquisition target required to be SBA-compliant?
Not necessarily, the acquiring company is the borrower.
Can SBA 7(a) loans fund 100% of the purchase price?
Rarely, equity injection is almost always needed.
Can I track my application?
Your lender provides regular status updates through each stage.
Do larger loans take longer?
Slightly, due to additional underwriting and appraisals.
Can I start spending funds before closing?
No, funds are available only after closing.
Does SBA approval itself take long?
Usually 5–10 business days after lender submission.
Is 10% always enough for the down payment?
Not always, deals with high goodwill or limited collateral may require more.
What if my business already owns assets?
Existing equity can offset required injection for expansions or refinances.
When is equity due?
Typically, at or before closing, verified via bank statements.
Can seller financing replace my down payment?
Yes, if structured correctly (full standby).
Can I borrow my down payment?
No, funds must be unencumbered and verifiable.
Can I use it for investment property?
No, the business must occupy at least 51% of real estate purchased.
Can I refinance existing loans?
Yes, if the refinance improves cash flow and meets SBA benefit tests.
Can funds be used for marketing or hiring?
Yes, both are approved working capital uses, provided proceeds are directly tied to business operations.
Can I use a 7(a) loan to buy out my business partner?
Yes. Partner buyouts are among the most common SBA transactions and can include goodwill financing with 10-year terms.
Does Port 51 Lending only lend to certified firms?
No, Port 51 Lending works with all qualified business owners who meet SBA 7(a) guidelines.
Can veterans combine grants with an SBA loan?
Not within the same funding stack, but separate SBA programs (like VetCert or Boots to Business) can complement lending.
Do I need to be SBA-certified before applying?
Not for lending purposes, though certification strengthens contracting and federal-procurement opportunities.
Can a startup qualify for an SBA loan?
Yes, if the owners contribute sufficient equity and have relevant industry experience.
Are there special rates for women or minority borrowers?
No, SBA 7(a) rates are standardized and based on Prime + spread, ensuring equal access.
Is interest tax-deductible?
Generally yes, borrowers should consult their CPA for specific guidance.
Can I pay ahead each month?
Yes, extra payments apply directly to principal with no penalty after year 3.
Do SBA loans include balloon payments?
No, they’re fully amortizing, unlike many conventional CRE loans
Can I refinance later?
Yes, after SBA conditions are met and prepayment period expires.
Are SBA 7(a) loans always variable-rate?
Not always, fixed options exist but are less common.